Check 21 A Certainty: Less Certain Is Host Of Other Issues

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There's no problem creating substitute checks that will meet the requirements of Check 21.

But the picture gets a little fuzzy as to how those checks will be electronically processed, according to Doug Tangwall, product manager at CUNA.

Check 21, or the Check Clearing for the 21st Century Act, "was kind of cleverly crafted to open the door to electronic check processing without mandating it," explained Tangwall.

The Real Concern

"The real concern now is how the market will adapt itself to the electronic processing environment," he said. "We're in more of an evolution than a revolution towards Check 21."

It may be a while before CUNA has definitive guidelines regarding the ins and outs of electronic check processing, Tangwall said.

"The first round of CUNA's involvement in Check 21 was to interpret the law," Tangwall said. "The second round will be the evolution of check processing and CUNA's role in setting those standards."

Tangwall said the industry must confront several issues as financial institutions attempt to engage in check image exchange:

* Standards for check images. The industry will have to set image conventions, regarding size and resolution for example.

* Standards for image usability. "The usability component is trickier," Tangwall said. Early adopters of imaging technology have experienced technical difficulties. In once instance at a bank, Tangwall said, a scanner smeared with correction fluid left black streaks through all check images. In addition, there's no guarantee that proprietary software implemented now will also meet future image exchange requirements.

"Some organization such as BITs is going to have to define usability standards," Tangwall suggested.

* Federal laws regarding electronic check processing. There are none, Tangwall said. Clearinghouses may be forced to create and agree upon their own rules. The Electronic Check Clearing House Organization (ECCHO) has a good start, said Tangwall. The non-profit advocacy group has suggested e-check processing guidelines in nearly 300 pages of written rules.

* What happens to physical checks? "Check 21 is silent on this issue," Tangwall noted.

CUJ Resources

For more info on this story:

* CUNA at

* The Electronic Check Clearing House Organization at

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